- The WTI price fell to around $ 61,55 in the early Asian session on Thursday.
- Petroleum inventories increased by 3,454 million barrels in the week that ended on May 9, according to EIA.
- A rebound in the US dollar also weighed on WTI prices.
The West Texas Intermediate (WTI), the referent of American crude oil, is quoted around $ 61,55 during Thursday’s Asian negotiation hours. The WTI price falls in the middle of a surprising increase in the inventories of US crude oil and renewed concerns about demand.
The US crude oil inventories registered an unexpected increase last week, which generated concerns among investors about excess supplies. The Weekly Report of the US Energy Information Administration (EIA) showed that crude oil reserves in the US for the week that ended on May 9 increased by 3,454 million barrels, compared to a drop of 2,032 million barrels in the previous week. The market consensus estimated that reserves would decrease to 1.0 million barrels.
The organization of oil exporting countries and its allies (OPEC+) are ready to increase oil exports in May and June, which could limit the bullish black gold potential. OPEC has increased oil production more than expected since April, with a production in May that will probably increase by 411,000 barrels per day.
Optimism about the reduction of global commercial tensions has led operators to reduce the probabilities of a recession. This, in turn, could provide some support to the dollar and weigh on the price of raw materials called in USD, since it makes oil more expensive for investors who have other currencies.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
